Gandalf is a Maiar, a demigod, but prohibited from and stripped of his power in Middle Earth. The Balrog, also a Maiar, a demon of terror that was not stripped of it's power.
.
He was level balance locked to the rest of the party and needed them to leave in order to unleash his power to defeat it.
.
Not to mention that he knew from the histories of Middle Earth, fighting and killing a Balrog usually reaulted in that warriors death.
http://scifi.stackexchange.com/questions/12448/why-was-gandalf-afraid-of-the-balrog-of-morgoth
.
He was level balance locked to the rest of the party and needed them to leave in order to unleash his power to defeat it.
.
Not to mention that he knew from the histories of Middle Earth, fighting and killing a Balrog usually reaulted in that warriors death.
http://scifi.stackexchange.com/questions/12448/why-was-gandalf-afraid-of-the-balrog-of-morgoth